Bank of England Monetary Policy Advisor Feels Bitcoin Has Flaws

Bank of England Monetary Policy Advisor Feels Bitcoin Has Flaws

JP Buntinx | July 20, 2016 | 2:30 pm

The Bank of England is playing a very strange game right now. The institution is keen on issuing its own national virtual currency. However, they are still no fan of Bitcoin, as they feel the currency is “peppered with flaws.” Such a statement is not entirely surprising, though, as no banks have a vested interest in embracing a digital currency they cannot control.

Interestingly enough, a representative of the Bank of England has announced the UK will not adopt a central digital currency anytime soon. While Bitcoin is not centralized by any means, this could indicate they will not go ahead with their plans to issue BritCoin either. At the same time, the financial institution remains a big fan of blockchain technology, as it can make central banking more efficient.

Bank of England Thinks Bitcoin is Flawed

A meeting took place between the Bank of England and the House of Lords yesterday. On the agenda was the topic of issuing a national virtual currency using distributed ledger technology. Research had to be done to determine how such a project would impact commercial banks and other aspects of finance.

As it turns out, an electronic central currency is not such an easy way out as initially assumed. For now, these plans “remain a long way off”. There are technological barriers that need to be overcome, and it would also involve a significant restructuration of the entire financial system. Integrating a distributed ledger technology system with existing infrastructure is quite a challenge.

Bank of England’s Monetary Policy Advisor Ben Broadbent stated:

“If you are talking about an all-singing, all-dancing central bank digital currency, replacing not just the liabilities we currently handle, but prospectively substituting it for commercial money then yes, that is a long way off. That is not just about technology; that would be a matter for the shape of the financial system.”

But Broadbent went even further, as he called Bitcoin a currency with “huge deficiencies”. That is not entirely surprising, as no central bank in the world would embrace decentralized cryptocurrency. This is part of the reasons to why these institutions want to embrace blockchain technology, as they can build private and permissioned solutions.

The department of work and pensions in the United Kingdom is experimenting with a currency called GovCoin. This particular solution examines the usage of blockchain technology for welfare payments. However, there are still some regulatory concerns that need to be addressed in the future.

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